Common Paradigm Vs. Success Paradigm
There are three types of incomes, these being earned, portfolio and passive
income. For the purposes of our presentation, I will concentrate on the
earned and passive type. These two incomes are also known as reciprocal
and residual incomes.
Reciprocal Income
This is the kind of income that comes from work done. It is always in direct exchange for effort done and is paid according to the said work and the going rate. It is a direct exchange of time for money.
The best analogy is one of a lizard. It hunts for a living and survives by exchanging its skill for hunting plus the time to hunt directly for its food. If it does not hunt, it will starve to death. So, the lizard must hunt always in order to survive and the better and more skilled he is, the more food he will get!
Examples of earned income in various fields
In real estate
In investments
The above scenario is what I call the common paradigm as most people know and strive for earned income. However the greatest challenge that faces those earning this kind of income is that if they should ever fall sick, or lose their jobs or become incapacitated, then they lose their income because it is a reciprocated income.
In short, if they stop working, they starve!
This income group includes employees and the self employed as these two types of people exchange their time for money albeit it varies according to the skills they possess.
Most people in this group rely on pensions, insurance and welfare to take care of them when they can no longer work. However, current trends are clearly showing that governments as well as pensions and mutual funds across the globe can no longer afford to take care of their retiring citizens.
The best analogy is one of a lizard. It hunts for a living and survives by exchanging its skill for hunting plus the time to hunt directly for its food. If it does not hunt, it will starve to death. So, the lizard must hunt always in order to survive and the better and more skilled he is, the more food he will get!
Examples of earned income in various fields
In real estate
- When you buy and sell real estate as a real estate dealer.
- When you sell real estate information to real estate buyers by being an agent or a real estate broker, also, when you are an employee of a real estate company.3.
- When you are a property developer.
- You build and sell or renovate and sell.
In investments
- If you are a fund manager you are being paid salary. If you will not report to work you will not get paid.
- If you are stocks or FOREX trader and you have to stick your eyes on the computer all the time to watch the market graphs up and down and take advantage of the bear and bulls. You have to decide in any given moment if you are going to buy and sell.
- If you are a professional that caters to clients, such as accountants and registered financial planners. You got to report to your clients and do your tasks in order to get paid.
- You own a business with less than 500 employees and you got to make sure that you are present in the operation of your business.
- You are a retailer that caters to retail customers or supplier for other businesses. You got to make sure that you always get the contract.
- You are a manager, vice president or employee of somebody else company. Most employees think that they own the company that they worked for.
The above scenario is what I call the common paradigm as most people know and strive for earned income. However the greatest challenge that faces those earning this kind of income is that if they should ever fall sick, or lose their jobs or become incapacitated, then they lose their income because it is a reciprocated income.
In short, if they stop working, they starve!
This income group includes employees and the self employed as these two types of people exchange their time for money albeit it varies according to the skills they possess.
Most people in this group rely on pensions, insurance and welfare to take care of them when they can no longer work. However, current trends are clearly showing that governments as well as pensions and mutual funds across the globe can no longer afford to take care of their retiring citizens.
Residual Income
This is the kind of income that comes from work you do once. In short,
you keep earning money for effort you did at one point in time. This
income is paid indefinitely for as long as there is demand for the work
you did.
The best analogy is that of a spider. The spider
does not hunt for food, instead, it spends some time (days) building a
productive asset in the form of a spider web. Once this spider web is
completed, it will sit back and watch all the food get trapped by the
web!
In short, the spider builds once, and then spends the remaining period earning passive food from the web! Most spiders work where it matters most, they spend their time ensuring that the web is in tip top shape to catch more food! They leverage their effort by maintaining and fixing their net or web regularly!
A productive asset can be defined as any business or property that gives you positive cash flow. Cash flow can be defined as the interaction of income and expenses over a period of time. Thus positive cash flow is when income exceeds expenses and hence the term residual or passive income.
This is the classic work-once-and-earn-money-for-the-rest-of-your-life scenario!
Examples of passive income in various fields
In real estate
What I love most about this is that once it is set up, it can run and give you passive income for generations or even centuries!
The Wealth Equation
Time + Effort + Money = Wealth
where time is the amount of time you put into creating, planning, executing and managing any given activity, effort is the actual work done and money being the quantifiable value you bring on board this value being skill and/or currency.
According to Buckminster Fuller, the true definition of wealth is the amount of time one can survive into the future if all their earned income were to cease. In short, if your passive income exceeds your expenses, then you would be defined as wealthy.
Suppose you spend $2,000 as your monthly expenses and your passive income is $3,000. This would mean that you have extra $1,000 free money and it would also mean that you can free up your time to do what matters most to you as opposed to doing what you have to.
This income group includes business owners and investors. You also get authors, writers, musicians, painters and just about anyone who has any form of bestselling intellectual property.
The purpose of this page is to show you one method that can allow you to develop an asset over a three to five year period that can see you earn passive income for life!
If interested, please click here.
In short, the spider builds once, and then spends the remaining period earning passive food from the web! Most spiders work where it matters most, they spend their time ensuring that the web is in tip top shape to catch more food! They leverage their effort by maintaining and fixing their net or web regularly!
A productive asset can be defined as any business or property that gives you positive cash flow. Cash flow can be defined as the interaction of income and expenses over a period of time. Thus positive cash flow is when income exceeds expenses and hence the term residual or passive income.
This is the classic work-once-and-earn-money-for-the-rest-of-your-life scenario!
Examples of passive income in various fields
In real estate
- When you have rental properties such as apartments and condominiums or what we called "income generating real estate" where every month you get rental income.
- If you are a share holder or a part owner of a huge real estate company that maybe is engaged in real estate marketing, management and development and you are getting dividends from your shares as a part owner.
- You are a joint venture (JV) partner of a huge real estate project and you are getting profits based on the partnership agreement. This case happens if you are a land owner and you choose JV instead of selling your land outright for a profit to real estate developers.
- You are a shareholder of an Investment Company. Where you make money from you dividends.
- You own treasury bills and bonds that give fixed interest income returns regardless of market forces.
- You cleverly use options to leverage on other people’s investment vehicles.
- In businesses
- You own shares of a huge business and you get dividends and profit sharing.
- You own a vending machine or a business with no or minimal overhead expenses and profits just keep coming in.
- You are involved in network marketing and have a large organization of distributors and the company pays you a royalty bonus for all the business and purchases made by them on a regular basis. ß This is what we are involved in and you can be part of it today! If interested please click here.
What I love most about this is that once it is set up, it can run and give you passive income for generations or even centuries!
The Wealth Equation
Time + Effort + Money = Wealth
where time is the amount of time you put into creating, planning, executing and managing any given activity, effort is the actual work done and money being the quantifiable value you bring on board this value being skill and/or currency.
According to Buckminster Fuller, the true definition of wealth is the amount of time one can survive into the future if all their earned income were to cease. In short, if your passive income exceeds your expenses, then you would be defined as wealthy.
Suppose you spend $2,000 as your monthly expenses and your passive income is $3,000. This would mean that you have extra $1,000 free money and it would also mean that you can free up your time to do what matters most to you as opposed to doing what you have to.
This income group includes business owners and investors. You also get authors, writers, musicians, painters and just about anyone who has any form of bestselling intellectual property.
The purpose of this page is to show you one method that can allow you to develop an asset over a three to five year period that can see you earn passive income for life!
If interested, please click here.